A Study On Financial Support Of Innovative Small And Medium Enterprises In China

A Study on Financial Support of Innovative Small and Medium Enterprises in ChinaInnovation has been the basic pillar of promoting the scientific and technological progress, the driving force of promoting the economy and society harmonious development, the core power of gaining strategic highland in the future. Especially, after the international financial crisis, with the knowledge economy coming, enhancing the independent innovation capacity, developing innovative economy and building an innovative country for all the world are undoubtedly the important steps to enhance overall national strength, change the way of the economic development and keep the development continuous. But, as an important carrier of independent innovation, Innovative Small and Medium Enterprises determined the direction of economic development in the future. Since 2006, the Chinese government clearly implemented innovative enterprise pilot work and carried out preferential treatment in laws and regulations, funding, tax incentives and other aspects of preferential policies. After several years'development, it has gained some achievements. However, because the features of the innovative SMEs are "high risk, high investment, high efficiency ", which makes the development of them not optimistic. Compared with the innovative SMEs'contribution to the economic growth, what they receive from the financial system is serious mismatch. Then, why dose the contradiction between innovation and finance arise? How should we resolve it? Therefore, as an important research subject, the financial support of the development of innovative SMEs in China has the important theoretical and practical significance for guiding Chinese economy to be sound and healthy.This thesis is on the basis of reading and combing domestic and foreign relevant literatures, and comparative analysis, typical example analysis and other research methods are adopted, in order to elaborate the mechanisms theoretically that how the finance supports innovative SMEs development, and summarize the development experience in United States and Japan. According to the actual situation, the thesis researches the current situation of financial support and constraints in China. Finally, feasible suggestions are proposed under the government's guidance, multi-party participation, market operation, comprehensive coordination, professional management and the principle of prudential supervision in order to build efficient financial support system and promote the development of innovative SMEs.This thesis includes six parts:The part I is introduction which elaborates the background of the topics, significance, and the concept of innovative SMEs. Firstly, innovation and financial support system do not match between each other, therefore, it is imperative to build efficient financial support system to promote the development of the innovative SMEs. Secondly, the relevant literatures are reviewed. Finally, the whole approach of this study is briefly introduced, including the possible innovation and the structure of the thesis.The part II is the theoretical basis. This part elaborates the mechanisms of financial support for the innovative SMEs development, namely: capital formation mechanism, information disclosure mechanism, incentive and restraint mechanism, risk-sharing mechanism, which are the theoretical basis of building an efficient financial support system to promote the development of the innovative SMEs, and also a guideline to promote technological innovation integrating with the financial development.The part III is the foreign experience of how the finance supporting the innovative SMEs development. Takes United States and Japan as cases, described the venture capital, capital markets, credit guarantees, policy finance, commercial banking and others in detail in order to provide some references for building a financial support system to promote innovation.The part IV mainly analyzes the status and constraints of financial support for innovative SMEs development. Points out that in recent years, as the country pay more and more attention to the independent innovation capability of enterprises, no matter directly or indirectly financing system makes greater efforts to support innovation activities, the relative laws and regulations are also maturing. However, it still cannot meet the financial demand of innovative SMEs, some problems need to be solved, for example system security is not perfect, financial support system structure is simple, capital market development lags, the general venture capital strength is weak, and so on.The part V, on the basis of the theoretical study, constraints and status analysis, puts forward feasible suggestions, which is the climax of the whole thesis. Through in-depth and detailed analysis, some policies and suggestions from four aspects of policy finance, commercial banking, capital markets, and venture capital are proposed to improve the development of innovative SMEs, these are as follows:Improve the relevant laws and regulations to provide institutional guarantees; improve the tax policy to enhance the innovative capacity of endogenous financing of SMEs; set up China Independent Innovation Development Bank; build sound credit guarantee system and technological innovation insurance; further deepen the reform of commercial banks; nurture local small and medium financial institutions; encourage private financial investment; actively develop multi-level capital market; further strengthen the SMEs board and Growth Enterprise Market building; develop corporate bond market; improve the property rights trading market; establish internal financial company in the enterprise; cultivate a variety of risks investors to achieve diversification of the capital sources; make sure of the focus areas and key stages of venture capital; train professionals and establish experts database. Meanwhile, in the end of the chapter, a typical example of High-tech SMEs "ladder financing model "in the high-tech zone of Chengdu is analyzed.Part VI is the conclusion of this thesis. Based on the study, the conclusions are as follows: under the principle of adhering to the government's guidance, multi-party participation, market operation, comprehensive coordination, professional management, and prudential supervision, a sound and efficient financial support system is to be built to promote the development of the innovative SMEs.